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zhannawk [14.2K]
3 years ago
5

How much money should be deposited today in an account that earns 7% compounded semiannually so that it will accumulate to $12,0

00 in four years?
Mathematics
1 answer:
Korvikt [17]3 years ago
3 0

Given rate is = 7% or 0.07

Total amount needed = $12000

Time = 4 years

Here, the  deposit is  compounded semiannually, means twice per year and this gives 8 annual compounding periods in 4 years.

The equation becomes:

P= \frac{12000}{(1+\frac{0.07}{2})^{2.4}}

P = \frac{12000}{1.035^{8}}

Solving it, we get P = $ 9112.93

Hence $9112.93 should be deposited today.



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